IRS headaches mean pain for taxpayers

The IRS is shifting focus from taxpayers to large projects such as Obamacare. | AP Photo

“We want to conclude the ongoing investigation. That means the IRS must comply with Congress and provide all documents and email the Ways and Means Committee has requested. Once that happens and trust is restored in the IRS, we can have a serious discussion about its budget,” Boustany said.

Koskinen said he is sympathetic to concerns of congressional Republicans and is prepared to show “the proof is in the pudding” — a phrase the former Freddie Mac executive is fond of using to illustrate how he expects to prove the agency is changing.

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But he also wants to move past the targeting controversy, which has dogged the agency since it broke in May.

“There are 800 people working in our exempt organization division … so people have to understand that the 89,000 other people are doing critical work that had nothing to do with [the targeting],” he said. “So to continue to hold the entire agency hostage to the issue, or complain and say the entire agency therefore needs to do without money, that doesn’t seem to be an appropriate response to what is a serious problem.”

Koskinen said selling the individual harm caused by budget cuts is one strategy to persuade appropriators next year to increase the budget. He didn’t have much time after his late December confirmation to lobby House Appropriations Committee Chairman Hal Rogers (R-Ky.) and his Senate counterpart, Sen. Barbara Mikulski (D-Md.) to increase the budget before they unveiled an appropriations bill in January.

But now he plans to stress to lawmakers how long waits will affect their constituents.

“The fact that our enforcement revenue agents and officers are down by over 3,000 people … doesn’t resonate. What does seem to resonate … is that they are constituents. There are 18 million calls that went unanswered; even if it’s 9 million people calling twice, that is a lot of American voters, American citizens who are getting really crummy service,” he said.

Service also gets the “squeeze,” as Everson describes it, because of inflexibility in the agency’s budget.

Nearly three-quarters of the agency’s $11 billion budget is for employee salaries — a number that makes it hard for the IRS to quickly react to budget changes as the workforce is protected by both union and civil service guidelines, which means it can take years to fire an employee.

With such large swaths of the budget spoken for, voluntary agency programs like service initiatives often get cut first.

The agency has 10,000 fewer employees than just four years ago.

“There is a larger workload and there are significantly fewer employees. What does that mean? It means there is less time for employees to interact with taxpayers. That’s not optimal,” said Jorge Castro, a former senior IRS official who now runs a D.C. consulting firm. “Taxpayers benefit from interacting with a well-trained workforce that understands their issues.”

The IRS has taken steps to shed expenses and automate helplines for taxpayers.

Office space cuts will reduce the budget by $40 million this year, and a reduction in mailings will save the agency $60 million. There has also been a concerted effort to direct taxpayers online for simple questions about filing requirements, to track refunds or access previous years’ tax transcripts.

But directing vast numbers of taxpayers online can create problems, too, said Robert Kerr, senior director of government relations at the National Association of Enrolled Agents, whose members advise taxpayers.

“It’s a ‘Take two Internets and call me in the morning’ solution,” Kerr said. “It is distinctly distasteful to a lot of the folks who need assistance from the IRS, because they want to talk to someone, they don’t want to go on the Internet. The Internet solution is making broad assumptions about a broad swath of the American public, as not everyone is particularly adept.”